CHAPTER ONE

INTRODUCTION

1.1      Background of the Study

Globalization is real. The world now has bigger and complex market, and better communications. Organisations and nations are constantly repositioning for advantage, as product cycles and design cycles become shorter, and planning horizons becomes shorter, requiring faster reaction cycles. Aimiwu (2006) opined that, in a world where no advantage is permanent, competitors are constantly creating new value to attract value; and only organsations with valuable products often have something positively interesting to be talked about; as only value attracts value, and rubbish attracting rubbish (Anderson, 1998).

It goes therefore that on the harsh realities we all have to confront in the challenging world of globalization, all marketing efforts should be, market focused, consumer oriented, backed by integrated/co-ordinate marketing aimed at generating customer satisfaction as the key to satisfying organizational goals to enhance competitive edge. Organisations in Nigeria only have to do right things, and do things right; aborting the syndrome of Caveat Emptor (buyer’s beware) which is the sellers’ market, embracing Caveat Venditor (seller’s beware) the buyers’ market. More so, to succeed in modern marketing, consumers expect to be given whatever they want, when they want it, where they want it, how they want it and why they want it. To achieve these, creativity which refers to originality and innovativeness must be embraced because there are times all we know about marketing or all existing knowledge and strategies in marketing may not help tackle a difficult marketing problems (Nwosu, 2001). In such situation, product quality drives word-of-mouth in which consumers communicate to others in an unofficial way after they have used a product or taken a service can be a creative way of drawing attention to the great importance of the customer, profit and competition (Ndubisi, 1999).

To be creative and successful, organisations in Nigeria need to use the above principles to add value to their products and services, recognizing that consumers do not just buy products or services, they buy utility, they buy solution, they buy benefit which the product offers. The survival through creative ingenuity or ability is what the researcher meant by

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consumer orientation and quality-focus that yield satisfaction and leads to word of mouth communication.

However, the challenge of getting the attention of and remaining in the mind of the consumers have steadily increased, requiring organisations to create well-planned and comprehensive marketing communication programmes in order to achieve company objectives. The marketing communication budgets of the major competing firms in most industries in Nigeria have skyrocketed, having a negative effect on their profitability level. Holloway and Robinson (2000) recognized that much communication about products actually takes place by word-of-mouth recommendation.

Substantiating the above authority, it is evident that organisations start marketing activities from the consumer (i.e. marketing orientation) and ensure effective and efficient quality of their products before placement to the target audience. A satisfied consumer definitely would recommend to others the satisfaction derived in his choice of organisations’ product (Bristor, 1990).

Sverrir (2000) is of the opinion that marketing managers have four distinct ways of communicating the promotional message to the public through the following;

1.                 By communicating the product through a selected medium such as television or the press.

2.                 By using staff to engage in personal selling, either behind the counter, over the phone, or calling on clients as sales representatives.

3.                 By engaging in sales promotion activities, such as window display or exhibitions.

4.                 By generating publicity about the product through public relations activities, such as inviting travel writers to experience the product, with the hope that they will review it favourably in their papers.

Beside the aforementioned formal marketing communications is an informal one, termed “word of mouth communication”. Westbrook (1987) defined word-of-mouth as the opinion

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which consumers communicate to others in an unofficial way after they have used a product or taken a service. In the view of Bristor (1990), word-of-mouth is the approach to obtain others’ experiences through the interaction of social network. This information communication channel is normally thought to be more neutral and more reliable, because it is mostly generated directly by consumers rather than by companies. Some people think that marketing is about advertisements and promotions. Engel, Blackwell and Miniard (2001) suggested that the post-purchase behavior is reactions after consumers purchased a product. Unfortunately, empirical evidence is currently scanty regarding the relative effectiveness of WOM marketing in increasing firm performance over time.

More so, considering the costly nature of the formal marketing communication mix elements, knowledge of consumer behavior is a necessary foundation for any successful marketing programme. And of course, one important aspect of consumer behaviour is word-of-mouth communications, that is, consumers telling other consumers about their experiences with a company or their product. Surprisingly, little in the way of empirical research is available that quantifies the extent of such consumer word-of-mouth communication in Nigeria.

However, taking decision on sales is the most difficult tasks facing many business executives in Nigeria. Hence it is difficult to predict, estimate or determine with accuracy, potential customers’ or consumer demand as they are uncontrollable factors external to an organization. Therefore, because of the importance of business survival and the connection between consumers, sales and earnings, it is expedient for organisations to engage in programmes that can influence consumer’s decision to purchase their products. This is where consumer-orientation and quality-focus play a key role; because a satisfied consumer is motivated to transmit satisfactory message through word-of-mouth, as a tool for enhancing organisations’ communication objectives. Hence, all marketing efforts must be consumer-oriented and quality-based, knowing that the essence of any business outfit is to produce for sales in order to remain in business. Horgren, et. al. (2008) specified that an organization must generate enough sales from its products to cover operating costs and posting reasonable profits. For many organisations, sales estimate is the starting point in budgeting or profit

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planning. It is so because it must be determined, in most cases, before production units could be arrived at while production units will in turn affect material purchases. Evidence here is that marketing activity starts through word-of-mouth communication even before the product comes out.

Word-of-mouth refers to the passing of information by verbal means, especially recommendations, but also general information, in an informal, person-to-person manner. Word-of-mouth is typically considered face-to-face spoken communication, although telephone conversations, text messages sent via SMS, and web dialogue, such as online profile pages, blog posts, instant messages, and e-mails are also included in the purview of word-of-mouth communication (Krishna and Mihir, 2009). It is believed that this form of communication has valuable source credibility i.e. opinion leaders, co-workers, neighbours, friends and relatives that are more likely to influence consumers’ choice than any other source of information at little or no cost (Eze and Ozo, 2005). The word-of-mouth testimonial is an extremely important factor in the calculus of the consumers’ final purchasing decision. It can even be a more influential factor than mass media communication (Technical, 1980).

Marketing scholars and practitioners have long been concerned about the impact of marketing communications on consumers’ response and loyalty. The level of concern has increased in recent years due to the emphasis placed on productivity and accountability of the marketing function which is the pivot on which all corporate activities revolve. Observably, the major issues tend to hinge on the credibility of marketing communications vis-à-vis the relative results recorded to justify the huge expenditures incurred in many firms. Aaker and Carman (1982) reported that in most cases, firms over-advertise, recording high expenditures without a concomitant measurement of the relative effects of such communication.

In a similar vein, Prasad and Sen (1999) presented an in-depth review which supports the earlier findings of Aaker and Carmon. The fact that most firms do over-communicate without the impact of such communication, has become a contending issue which needs to be resolved, while approaches that are cost effective and efficient enough to achieve the

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organisations marketing objectives through customer-orientations and quality-focus are left in abeyance.

In Nigeria, the contention appears to be greater because of the paucity or total lack of research efforts in this direction. Many firms promote without evaluating the relative effects of such promotions, as Rust (2004) suggests, there is an urgent need to measure how marketing communications add to shareholders value, undoubtedly, the lack of such evaluation tend to increase the apprehension of corporate managers on the claim or acceptability of marketing as the engine that drives productivity and credibility in modern organisations. The researcher therefore examines the effects of word-of-mouth communication on consumers’ choice of products of selected organisations, as a tool for achieving organization’s communication objectives.